Giant retailer to infiltrate inner-city ‘deserts’
As previously mentioned, Wal-Mart is expanding but it is not only with Supercentres to the suburbs of Canada.
Wal-Mart plans build 50 stores in U.S. urban neighborhoods, starting with Chicago. President and CEO of the U.S. division Bill Simon said “No family should have to choose between food that is healthier for them and food they can afford.” Other cities being considered include: Detroit, Houston and Philadelphia.
The new locations will be in densely populated city neighborhoods, where household incomes are low and crime is high. These areas, often called “food deserts”, are neighborhoods with no place to buy the recommended foods for a healthy diet; many fast food and convenience stores instead of traditional grocery stores.
The move will increase access and convenience to healthy and unprocessed foods. The new stores will also work on job creation and economic improvement in the neighborhoods by creating 15,000 to 20,000 jobs country wide and having special programs to benefit local businesses.
The high density of the city neighborhoods make for an ideal market. Even though residents of some urban neighborhoods may be poor, by focusing on its core retail value proposition Wal-Mart will bring selection and convenience to these ‘food deserts’ and capitalize on their considerable buying power by being low priced. When choosing other sites, Wal-Mart should follow the General Location Decision Process to ensure they are conveniently located to the largest potential market.
The move to increase availability in the inner city coincides with Wal-Mart’s plan to make thousands of its packaged foods lower in unhealthy salts, fats and sugars, and to drop prices on fruits and vegetables. These moves are supported by the first lady Michelle Obama, who is trying to combat childhood obesity and believes Wal-Mart has “the potential to transform the marketplace and help Americans put healthier foods on their tables every single day.”
Not everyone is convinced that Wal-Mart should be allowed in low-income neighborhoods. Critics say Wal-Mart has a devastating effect on communities since small merchants cannot compete with Wal-Mart's prices and that the company pays too little while charging too much for health insurance. Wal-Mart has also been blamed for focusing on low-cost products forcing the outsourcing of American manufacturing jobs to other countries, helping to creating the some of the lower income neighborhoods it is planning to move into.
As the largest grocer in the United States, Wal-Mart may be the only company with the ability to move into these areas. For all the problems and downfalls of the company, this is a positive move that will be positive to many lower class people and their communities. The high density and a lack of competition in the chosen locations will make for lots of traffic for the stores resulting in high profitability. By focusing on selection and convenience once the stores are built, Wal-Mart will be able to serve high volumes of customers which will make up for their lower incomes. I may not agree with many things that Wal-Mart does, but this is one time where the retail giant seems to be have aligned its own interest and helping others in a profoundly beneficial way.